Life insurance policy, provisions options, and riders 

What is the purpose of settlement options in life insurance policies?

To determine how the death benefit will be paid to the beneficiary

What are the dividend options in life insurance policies?

Cash, reduced premium, accumulation at interest paid up additions, paid up option, and one year term

What are the most common exclusions in life insurance policies?

War and military service hazards, occupation, and aviation

Who does the common disaster clause protect?

The contingent beneficiary

What required provision protects against unintentional policy lapse

Grace.

What type of assignment is used to secure the payment of depth within an existing life insurance policy?

collateral assignment

What type of beneficiary is next in line after the primary beneficiary?

Contingent beneficiary

Who controls changes in premium payments based values and loans in a life insurance policy

Policy owner

In the fixed period settlement option who will the number of installments for the death benefit proceeds determine the amount of the installments

The longer the period selected the smaller each installment will be

What dividend option is automatically selected by the company if not chosen by the policy owner

Paid up additions

What settlement options are available in life insurance policies

Lump sum/cash fixed, Fixed amount, life income, interest only.

When will a contingent beneficiary received death benefits from a life insurance policy?

When the premium beneficiary dies before the insured

What provision in a life insurance policy extends coverage beyond the premium due date

Grace. Period.

What term is used to describe methods of payment of the death benefit to the beneficiary upon the insureds death?

Settlement options

What provision allows the policy owner to reactivate a lapsed life insurance policy within a specified period of time with proof of insurability

Reinstatement

What type of beneficiary can be changed at any point by the policy?

Revocable

What life policy writer allows the company to forgo collecting the premium if the insured becomes disabled

Waiver of premium

What life insurance policy provision prevents an insurance from disputing or denying a claim due to misstatements on the application after a certain period of time

Incontestability

An application for life insurance, Miss stated her age on the policy application. How will this affect the death benefit?

The death benefit will be adjusted to the amount that the insured could obtain for her correct age

What are policy dividends?

Return of unused premiums

What is the purpose of the automatic premium loan provision?

To prevent the unintentional lapse of a policy because of nonpayment of the premium

What is the name for a life insurance policy rider that provides coverage on the insureds family members

Other insured rider.

What happens to the proceeds of a life insurance policy if there is no named beneficiary

The proceeds are paid to the insureds estate

To meet the requirement of the entire contract policy, provision and insurance policy must contain what

A copy of the general insurance application

what happens to a policies, cash value under an extended term non forfeiture option

The cash value is converted to the same face amount as in the whole life policy

An insurer has discovered a representation on a life insurance policy application regarding the insureds age. The insured is 10 years older than he stated on the application what will the insurer do regarding the death benefit?

Pay a reduced death benefit

What beneficiary designation has first claim to the death proceeds of a life insurance policy

Primary beneficiary

With the reduction of premium dividend option. How is the dividend used?

The dividend is applied to the next year’s premium(it reduces the next year’s premium)

If a settlement option is not chosen by the policy owner or the beneficiary what option will be used by the insurer

Lump sum payment

When can an insurance company use suicide as a defense against paying a death claim

When a suicide is committed with a new specified period of time after the policy is purchased(usually two years)

With the insert only settlement option, what happens to the policy death benefit?

Policy proceeds are retained by the insurance company. Only the interest is paid to the beneficiary.

Under what nonforfeiture option does the company pay the policy surrender value and have no further obligations to the policy owner

Cash surrender

What nonforfeiture option provides coverage for the longest period of time

Reduced paid up

What is the purpose of a free look period

To allow the insured to return the policy with a full refund

What does the term double indemnity mean?

The insurance will pay a benefit of twice the face amount

Who has the right to the cash value of a life insurance policy?

Policy owner

Which of the two types of policy assignments require requires transfer of all ownership rights in the policy to the third-party

Absolute assignment

Is the beneficiary required to have insurable interest in the insured?

No beneficiaries do not have insurable interest in the insured

What life insurance policy provision states that both the policy and a copy of the application form from the contract between the policy owner and the insurer

Entire contract.

The soul beneficiary of a life insurance policy dies before the insured. If the policy owner does not amend the beneficiary designation what will happen to the policies death benefit

It will be paid to the insureds estate

What is the advantage of reinstating a life insurance policy as opposed to applying for a new one?

Policy premium is a retained policy will be set according to the insureds original age

What are the three nonforfeiture options in life insurance policies?

Cash surrender, reduced paid up, and extended term

What non-forfeiture option is automatically selected by the company if not chosen by the policy owner

Extended term

A policy owner borrowed a portion of cash value from his whole life policy if the loan is not repaid, how will that affect the death benefit to the beneficiary?

The amount of the loan will be subtracted from the death benefit

What dividend option can increase the death benefit of the existing life policy

Paid up additions